Abstract

The 2008 Global Financial Crisis posed a serious question toward the justification and the sustainability of the world economic order governed by the West. Skepticism toward the West’s political and economic leadership is linked with the possible hegemonic shift between the United States and China, and there is even the prospect of an all-out reform of the international economic order. As the global economic order still finds itself in a transitional state, it is difficult to grasp its true characteristics of change. Still, it would be possible to point out that the impact of the economic crisis has brought: the change of U.S. and Chinese economic power, the negative prospect of neoliberalism as the dominant economic ideology, and the transformation of global economic governance.

Among these changes, it is increasingly important to understand the transformation of global economic governance. The global economic governance that will arise after the economic crisis will likely be in the shape of a complex network. This refers to the manner of governance in which intergovernmental organizations, intergovernmental networks, trans-governmental networks, and transnational networks share a sense of responsibility and authority toward resolving global economic problems. In other words, a complex network is a system in which hierarchical organizations represented by the state, together with other parallel networks set the rules for global economic activities.

According to mainstream international political theory, a change in world order takes place due to material, ideological, and institutional factors which the global financial crisis had a great impact upon. It further intensified the debate between the relative decline of the United States and its maintenance of material capacity; the Western economic model of liberalism and the Chinese economic model of statism; and the official Bretton Woods system and an unofficial network system. Out of this came the “complex network era” where there is an increasing diversity and complexity in format and actors. Namely, state actors such as China and other newly rising powers brought more diversification among the participants of global governance. A network actor like the G20 summit has become significantly important. The increase of bilateral currency swap has also shown that network is becoming more important as a mode of governance.

In particular, the emergence of the G20 summit as the main forum for economic cooperation initiated this complex network in many respects. The G20 itself is a network of networks. The G20 process is a multi-layered network comprised of Summit meeting, finance Ministers and Vice-ministers’ conferences, the central bank’s presidents and vice-presidents’ conferences, groups of professionals and government officials’ conferences, and business summit. It weaves diverse actors into governance through a series of skilled networking like discussion functions, outsourcing, and capacity fortification. In addition, as a forum for international governance, the G20 strengthens its network by launching network actors like the Financial Stability Board (FSB) or by indirectly leading to the forming of institutions like the 3G (Global Governance Group) and the C10 (Committee of Ten).

It is evident that the Global Financial Crisis has revealed the weaknesses of the post-war global economic order and has therefore provoked the need to search for an alternative order. From the governance perspective we have entered a complex network era in which traditional hierarchical organizations like the state and official international organizations interact with network players like transnational unions and non-state actors. In a complex network era a state’s power and leadership depends on the extent of its interconnectedness. It must select an adequate consulting partner required for problem solving and be able to mobilize public and private actors. Therefore, under this new global economic governance it will be required that Korean diplomacy not only addresses traditional inter-state diplomacy but also to take on a network strategy that includes transnational actors such as international organizations, inter-governmental networks, civil society, and a network of professionals.

The full text in Korean is available here